Correlation Between EMCORE and WiSA Technologies

Can any of the company-specific risk be diversified away by investing in both EMCORE and WiSA Technologies at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining EMCORE and WiSA Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EMCORE and WiSA Technologies, you can compare the effects of market volatilities on EMCORE and WiSA Technologies and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in EMCORE with a short position of WiSA Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCORE and WiSA Technologies.

Diversification Opportunities for EMCORE and WiSA Technologies

-0.12

Correlation Coefficient

EMCORE  WiSA Technologies

Good diversification

The 3 months correlation between EMCORE and WiSA is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding EMCORE and WiSA Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiSA Technologies and EMCORE is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on EMCORE are associated (or correlated) with WiSA Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiSA Technologies has no effect on the direction of EMCORE i.e., EMCORE and WiSA Technologies go up and down completely randomly.

Pair Corralation between EMCORE and WiSA Technologies

Given the investment horizon of 90 days EMCORE is expected to generate 0.45 times more return on investment than WiSA Technologies. However, EMCORE is 2.23 times less risky than WiSA Technologies. It trades about 0.03 of its potential returns per unit of risk. WiSA Technologies is currently generating about 0.01 per unit of risk. If you would invest  454.00  in EMCORE on August 21, 2024 and sell it today you would lose (157.00) from holding EMCORE or give up 34.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

EMCORE  vs.  WiSA Technologies

EMCORE

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EMCORE are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal forward-looking signals, EMCORE reported solid returns over the last few months and may actually be approaching a breakup point.

WiSA Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WiSA Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, WiSA Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EMCORE and WiSA Technologies

The main advantage of trading using opposite EMCORE and WiSA Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCORE position performs unexpectedly, WiSA Technologies can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in WiSA Technologies will offset losses from the drop in WiSA Technologies' long position.

The idea behind EMCORE and WiSA Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.